BofA to Sell $880 Million in Commercial Real-Estate Loans

by LJ Miehe on September 26, 2011

Bank of America is shedding assets to strengthen its balance-sheet and increase their cash position.  With the ongoing turmoil associated with lawsuits against the national bank, they are preparing for any large judgements or losses tied to alleged fraud on mortgage documents and improper procedures.   This is so large scale and pervasive, BofA will most likely take more losses in the future.  With this reduction, BofA can focus on its core businesses which are quite profitable when manged correctly.

It is in our best interest to have more, smaller banks instead of huge global financial complexes.   It doesn’t make me feel better that the place I deposit my savings, is doing high-frequency trading, off-balance sheet etc… and dark pools?!?  We need to get back to fundamentals so we can “get on with it”.   Banks are banks and Investment Banks are investment banks.

Wall Street Journal: Bank of America Corp. has reached an agreement to sell an approximately $880 million portfolio of commercial mortgages at a discount of 20% to 25% off the face value, according to a person familiar with the deal.

A venture of Square Mile Capital Management LLC, Invesco Ltd. and a fund managed by Canyon Capital Realty Advisors LLC is buying the portfolio, a mix of performing and nonperforming loans tied to 32 properties, the person said. The buildings include the eight-story Renaissance Centre office building in Wilmington, Del., and the Bank of America Tower in St. Louis, which is not owned by the bank.

The deal is among the largest commercial mortgage portfolio sales of the year, coming as many banks continue to shed loans made during the market’s peak. Generally, banks were reluctant to sell during the years immediately following the recession but began doing more deals as commercial real-estate values recovered.

Bank of America has been selling off assets that aren’t part of its core businesses. Recently, the bank has also sold an $8.6 billion Canadian consumer credit-card portfolio, an $8.3 billion stake in China Construction Bank Corp. and a $1.5 billion stake in HCA Holdings Inc. It also is planning to sell other international consumer credit-card operations and private-equity portfolios.

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